Albemarle Plans More Lithium Auctions

Albemarle, the world’s largest lithium miner, plans to organize more auctions for the battery metal in a bid to improve market transparency.

“What we're trying to do is build trust,” the head of Albemarle’s energy storage division, Eric Norris, told Reuters on the sidelines of an industry event in Nevada.

The lithium market lacks a global benchmark contract with prices normally set by futures in China, which is the biggest processor of lithium. According to Reuters, these prices are confusing so some in the industry are looking for ways to inject more stability into the lithium market.

For Albemarle, the motivation is its stock price, which last year suffered the effects of a Chinese lithium price drop, as did other lithium miners. Meanwhile, the London Metals Exchange is taking its time with a promised lithium futures contract, and CME Group’s lithium contract, although growing in terms of trade volume is still tiny compared to some of its other contracts.

The contract was launched back in 2021, sporting a size of 468 tons the following year. This soared to 20,307 tons last year thanks to that same price slump that came from China, which boosted appetite for hedging.

Albemarle meanwhile held its first lithium auction in March as it put its greater market transparency plans into action. “If we can create more volume, more liquidity ... that's going to benefit the entire industry,” Norris told Reuters this week.

Lithium is a key element for the energy transition because of its use in batteries. With EV sales growth slowing, however, and inflation keeping energy storage prices high, demand has wobbled recently. In fact, last year lithium prices dropped by 80% because of the combination of weaker demand and strong supply.

For this year, Fastmarkets is predicting a balanced market as producers slowed down production growth in response to the falling prices.

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com:

• Huge Rare Earths Discovery is Gamechanger in Americas Trade War with China
• Volkswagen’s Secret Project: A Hydrogen Fuel Cell Vehicle
• Natural Gas Outlook Mixed Amid Volatile European Markets